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Question: please use the information below to solve questions about alpha...

Question details

Please use the information below to solve questions about Alpha Company.

Partial financial statement data for Alpha Company:

20X6

20X5

Current assets

$6,328

$5,580

Inventories

$3,110

$3,299

Current Liabilities

$3,250

$2,275

Long-term debt

$7,154

$6,785

Common stock

$3,000

$3,000

Additional paid-in-capital

$4,000

$4,000

Retained earnings

$3,305

$2,180

COGS

$7,054

Gain on sale of land

$400

Net income

$1,550

Depreciation

$2,000

Accounts receivable

$5,080

$4,550

Accounts payable

$4,620

$3,440

Wages payable

$3,250

$1,125

Dividends payable

$800

$900

Taxes payable

$2,100

$2,310

Interest payable

$1,550

$1,255

Footnotes:

The company uses the LIFO inventory cost flow method. Had FIFO been used, inventories would have been $1,200 higher in 20X6 and $1,000 higher in 20X5. The effective tax rate for 20X6 was 30%. For all other years, the effective tax rate was 20%.

Per-unit cost information pertaining to some of Alpha's inventory is as follows (year 20X6):

Original cost

$1,317

Estimated selling price

$1,232

Estimated selling costs

$122

Net realizable value (NRV)

$1,310

Replacement cost

$1,197

Normal profit margin

$112

In year 20X7, Alpha Company issued $10,000 in 8% annual-pay, 5-year bonds, when the market rate is 9%.

a)Calculate long-term debt-to-equity ratio for 20X6 for both LIFO and FIFO inventory cost flow methods. Please show each step of your calculation and interpret your results.

b)Using the information about a new bond issue in year 20X7, please find the initial balance sheet liability and a liability one year from the date of the issue.

c)Using the information about a new bond issue in year 20X7, please find the sum of the interest expense on bond for year number 3, 4 and 5. Please explain your calculations.

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